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Any yesterday’s video we answered one of life’s great questions when to buy a stock exactly well that’s great now you know when to buy a stock the things you want to look at for buying a stock but now the question is when should you go ahead and sell that stock one of life’s other great questions guys it’s one thing to know when to buy it but then you know a lot
Of people get caught into the game of when do i sell it and they they sell way too early or they hold on to a stock way too long and end up taking a big losses a lot of different things guys now once again with the stock market you shouldn’t always expect to make money a hundred percent of the time especially if you’re looking at over a long term perspective over
A decade two decades three decades it’s a lifelong game okay you shouldn’t always expect to make money in every single stock you buy however the goal is to make money a lot more times than you lose money okay that’s the name of the game and the trick is like when’s the perfect time to sell so let’s kind of get into this as as with buying a stock selling stock
Has so much debate around it when’s the right time to sell because you know you’ve made money on or you’ve lost money on this position or maybe you haven’t done anything with that position maybe it’s just flatlined like what should you do so a lot of people you know they think ok you you buy in here you know your stocks is kind of moving up and then boom you kind
Of get a little pop you get a little pop right there you make some money and some people say this is a time to sell the sell it right that in there you made your money don’t be greedy don’t be greedy to you you made your pop there you got a you know your 10% gain or whatever go ahead and sell out of that position now move on to the next one some people will say
That ok let me tell you about a stock i bought this stock was named facebook so the stock name facebook right they go public and it’s a rough public offering ok and you know six months later the stock is like chopped in half from where they went public at i looked into the company i really liked the company i like i understand like they got a big opportunity
In front of themselves and i didn’t even understand facebook nearly as well back then as i do today ok and so i look into this facebook and i’m like i’m gonna buy some shares in this facebook stock so i buy what was at that time a lot of shares worth you know for my net worth at that particular time and i buy into facebook stock at $18.80 $18.80 all of a sudden
Very quick the stock rises pops it goes to like $19.90 or something like that $19.80 in a very quick amount of time i made a very nice profit on facebook and i was like you know what i’m just gonna go ahead i’m gonna take my profit right now and run out of this one well that was about six years ago five or six years ago and now facebook stock is somewhere around
A hundred and eighty dollars i believe maybe 170 hundred eighty dollars you guys can look it up ticker symbol fb somewhere around there okay so from the perspective of should i have gone ahead and in sold out of that position avid obviously no i should not i should have held those shares for the long term but i made it a little bit of quick money and i was like
Whoa i made a quick money on this one let me just sell out and take my gains and run and i was listening to kind of all the negativity and which that facebook had a ton of negativity around that time not a lot of people understood the stock i take my little bit of money and run and now it’s $180 stock do you think that was a very good decision you know that was
A horrible horrible decision to sell facebook stock in nineteen something dollars a share it’s like a joke price all right so that doesn’t really work okay that really doesn’t work now some people will say well don’t know so you know early on wait till you get a real big gain up okay wait till you make 50 percent a hundred percent on your position all right 50 a
Hundred percent in your position well once again we’ve been look at me with the facebook situation right i could have said okay you know what if i’ll sign you know i buy an $18 they goes to 36 i make a double up and you know in it i think a year or two later it was like a double up alright and i sell out at $36 well guess what over the next 3-4 years it went from
36 dollars still $180 so still they would have been a horrible decision so when you’re you’re buying to a stock you really like for the long term to say i’m going to take a quick profit or maybe even a big profit it doesn’t make sense to look at it from that perspective okay of just like oh it went up and and so let me go ahead and sell out and take my gains now
That’s not the way this game works now some people will say you know if you got in a stock in this stock he’s just not doing crap for you it’s just moving up down a little bit and you’ve been in the stock for a while move on to the next stock some people say that you know it’s just kind of like a flatline stock move on to the next one all right okay i have a stock
That i bought this was similar to around the time i had bought facebook okay this company was named pandora ticker symbol p pandora internet radio this was very different you know back then you know now there’s been so much innovation in the music game there’s been a lot of things that have changed apple musics come along spotify has gotten way bigger but back then
You know pandora was this internet radio company he was losing money at the time it was actually i think the first company ever invested in that was actually losing money if i recall and they couldn’t make money but at the same time their opportunity was it was huge in front of them and they had massive growth ahead of them okay and they were growing revenues like
Crazy and whatnot so i bought you two this pandora company somewhere around i think it was around 8 bucks somewhere around there okay i hold this stock for nearly a year it goes from seven dollars to $9 eight dollars and a year later i’m still the the shares are somewhere around eight bucks still okay and i didn’t have made any money really in the stock i haven’t
Really lost any money in the stock and i held it for nearly a year which at that time was still kind of within my first few years of investing so i was like all the time in the world right all the time in the world so i got frustrated with this stock and i sell out of my position completely at a rate around $8 i might have lost a little money made a little money
It wasn’t much at all okay it was basically around breakeven i just got frustrated with the stock and i was like you know what screw this i’m selling all this position right i saw this position well 18 months later 18 months later a year and a half later pandora shares are at $43 a share eighteen months after i sell out of my position right around $8 a share guys
So needless to say that was a really really bad decision just because a stock hasn’t done much over the past year or maybe we say even two years or three years doesn’t mean it’s not gonna do a ton in the future for you once again it depends on the business it depends on where the narrative with the company’s going all those type of things okay so this was a stupid
Idea guys i could have made a ridiculous sum of money okay this was probably my third biggest position at the time pandora is probably my third biggest position and i sell out completely after holding it for a year a year and a half later it’s at $43 this year okay so this whole game of oh it’s flatlining okay that doesn’t make sense necessarily so and at the same
Time you know pandora could have gone down absolutely but you know you got to judge off business fundamentals not what that stock is doing as far as what the stock price is doing now lastly some people will say you know what if you buy into a stock you know you buy into a stock right here and this stock shoots down you need to sell out that position okay you know
Put a 5% stop-loss on it 10% stop-loss like a lot of different people have different opinions stop-loss meaning if it goes down to that price is just gonna automatically sell your shares of course if it gaps down even more you need to have a range in there and things like that as more complicated trading stuff but some people say you know if it goes down gaps down
Five 10% sell out of that position just get out of it man wall street doesn’t like it right now get out of it oh my goodness once again this is a really really bad decision what would warren buffett tell you in this situation what would warren buffett tell you pretty much any great value investor what they’re gonna tell you you buy a stock here okay you love this
Stock and it goes down to here and you still love the business fundamentals of this company you don’t sell you buy more okay warren buffett myself any great value investor they’re gonna say you really love business fundamentals of this company if i love a company like their business fundamentals i think they’re gonna do phenomenal over the next three five 10 years
I really believe in this company a lot i look at the numbers look at the business everything in general and i look into this company i love it it goes down 10% and i still love the business fundamentals here does it make any sense at all for me to sell these shares no it makes sense to buy more it’s like going to the the the i don’t know h&m and you see a shirt
There in the window and you’re like dang i really like that shirt i think i think i want to buy that shirt i don’t have quite the money on me today to buy but maybe i’ll come back next week next week you come back that same church in the window but now it says a buy one get one free it says buy one get one free or buy shirt at 10% off and it’s like you going in
The window and say you know what no that’s 10% off noah’s buy-one-get-one-free you know what i don’t want it now that’s shirt it’s not much you know what i don’t want it what they’re like what like that makes no sense whatsoever guys that makes no sense whatsoever now if business changed and things like that you know it’s worth selling out but if you still like
The business fundamentals just because the stock goes down does not mean you should sell out of that sheriff i cannot tell you how many people sell out of shares when they go down okay imagine there were people selling facebook shares when it was that $20 a share i mean i went down to eighteen seventeen dollars right there were people selling at $20 a share of
Facebook and we’re probably like man i really like this company for the long term but it just went down a bunch and i lost some money on it so let me just sell now and then they saw the position and now facebook’s you like you know what i mean just think about that guys from that perspective in videos of the world all these these hut socks amazon you know many
Times amazon’s gone down a lot it’s gone down a lot of many times tesla there’s so many shares netflix i still remember it was like yesterday netflix shares were like 30 bucks a share right and now netflix is 300 i think or somewhere around there i want to say netflix like like guys you’ve got to judge it off where the business is going okay so now let’s get into
Why i sell out of a position there are three reasons why i decide to sell it out of a stock all right the first one the first reason i would decide to ever sell a stock is what i call bad bad okay if things have gone really bad for that company business fundamentals not stock price not stock price performance i’m talking about underlying business fundamentals
Income statements balance sheets things like that if things have gotten really bad for the company i may sell out of position especially if there’s something there’s like usually like a few things i would like my bullish thesis is on stocks okay any stock i buy into you know i always have bullish thesis is like those are like one or two and maybe three things
I really love about that company and why i think that stocks can go up a lot over time why they’re gonna expand their revenues and profits and things like that so i buy into this stock in all of sudden one of the two or three bullish thesis is i have on it goes really south like the like what are the business signs about and like i think they’re gonna expand and
Make into a huge thing if ulsan they exit that business line what do i have left at that point what do i have left that’s probably a situation where i want to sell sell okay things have gotten bad you know maybe the company does some crazy with the balance sheet where the balance sheet was a phenomenal balance sheet but over the course of two or three years maybe
I’ll sudden the company starts losing lots of money maybe they start paying out all their their money and dividends and whatnot and also this balance sheet goes from a balance sheet that’s rich in cash and investments and also they got a ton of debts on it there’s a situation that things have gone bad bad like i like it’s time for me to get out of that company if
The fundamentals underlying in the business erode if the bullish thesis i had going into that stock erodes and goes away then what am i in those shares anymore it’s time for me to just get out whether i have made money in that stock whether i’ve lost money whether the stock hasn’t done anything if the business fundamentals erode and get worse for the company and i
And it’s not like oh the company missed numbers by a light three cents or the company missed number by you know five percent of the revenue like i’m talking about actual business fundamentals like the big things that are overarching that are really gonna dictate that stock price over the next five 10 years if those things go away it’s time for me to get out that
Position i don’t care if i made money lost money it doesn’t matter it’s just time for me to get out of it the number two reason why sell out of a stock is honestly if it’s just gone up too much okay now what do i mean by gone up too much what do i mean by this because once again this almost goes back to the whole thing we were talking about earlier well the stock
Pops ten percent or 50 percent over 100 percent do you go out and sell out what do i mean by the stock gone up too much is the way i like to think about it is okay if i didn’t have a penny invested in this company right now when i even contemplate buying shares in the stock as of right now if the answer’s no it’s time for me to sell all those positions okay think
About it this way like like why would you expect someone else to pay a super high price for those shares if you were like i would never pay a print this price you know for these current shares like that makes no sense at all guys that’s when you get into greed territory when you’re thinking in your head like like someone’s crazy for buying these shares right now
I own these shares over here but someone’s stoop if they bought these shares on me like they got to be crazy i would never buy these shares at this price now if you’re thinking like that like like like you need to have stock asap okay don’t ever expect someone to pay a crazy price for your shares when you there’s no way you would pay that type of price alright no
There’s certain times where you just invest in a certain amount of money in the stock in in regardless whether it goes down more or whatnot like you’re you’re set like you have your position built in that stock that’s not what i’m talking about i’m talking about if you didn’t even own a shares in that stock and you looked in that stock you’re like dude i would not
I would never buy shares nice talk your grandma came viewings like should i buy some shares in the stock and you’re like grandma no like the stock is way overpriced right now i still own the shares but don’t buy these if it’s like that guys oh my gosh like you need to get out of that stock that’s just crazy okay that’s just crazy at that point time and the third
Reason i will sell out of a position is what i like to call michael myers all right the michael myers a effect i guess you could say anybody that’s ever seen the halloween movies knows michael myers and basically he’s just like you know super villain whatever you want to call him and you know he kills people and whatnot serial killer and he comes up behind people
And i’m talking about this in the respect that companies have michael myers coming behind them all the time okay the question is do they have a serious competitor right everybody in retail over the past five ten years has had this little company this is michael myers company they might put a little soft in that but they’ve had michael myers coming behind them and
What does amazon is doing is killing a retailer after retail or after retailer and it’s causing death to them all okay and you know some of them are just getting sliced up a little bit at a time you know just a needle here needle there the other ones are getting machetes into them okay that’s what it is right now so if you want a company and michael myers is coming
Behind you man you need a freaking get out of that stock okay i don’t care what pe that company’s at i don’t care you know what that company has going forward things like that if you feel there’s someone something serious coming behind your company that’s going to be a major major competitive threat in regardless you need to get out of that stock okay it’s not a
Stock you want to be in if if you no in the back of your head like you you feel like your company’s not gonna win this war and you got to be realistic with yourself okay you can’t like have too much pride for that stock member you’re dating stocks are not marry in stocks in this game you’re dating them okay is you know you can move on to the next one when you think
About it in that respect guys if there’s a major competitive threat you just have to be real with yourself okay and say man i don’t think i want to own these shares anymore i like like think about it you think about if you own sears stock okay you only sear stock for the last i don’t know 15 years or whatever like you could have seen all this stuff coming unless
You were completely delusional like i don’t know who’s been owning shir sears shares like over the pentagon have they gone bankrupt yet i’m not sure but whose own sears shares like over the past 10-15 years like it’s gotta be idiotic you look at it you know they had walmart coming after them and kmart and their sales were declining and their you know things were
Getting worse for that company and i started taking losses and they bought kmart which was a horrible decision that if i recall they bought kmart my goodness what a disaster that was then all said amazon starts coming in a major way into retail over especially over the past five years and they start stealing always you know sales from not only sears but all these
Other competitors like like michael myers was obviously coming but but people were delusional and like all or no and it’s not gonna happen to my company you’ve got to be realistic with yourself guys you don’t want to be in stocks that is obvious there’s some competitor coming in and they’re gonna start taking major market share those are the type of companies you
Don’t want to be in man because that’s that’s just a bad situation man your company’s more than likely going to get rolled over and now once again this doesn’t just mean that any competitive threat that comes into the space it’s got to knock your company off no you’ve got to be realistic with yourself you know what is that company’s brand strength so do they have
Brand strength and pricing do that brand strength and consumers just love that brand will consumers buy that brand even in a recession you’ve got to think about all these type of things guys but if michael myers coming behind your stock man you just need to freak and get out of that thing okay i don’t care what pees out i don’t care if it’s out five pe or eight
P they got some major dog coming in there and they’re gonna take cher and they’re gonna knock your company off like get out of it man it’s just worth it to go out have a time guys so those are three reasons why i choose to sell a stock i hope you guys really enjoyed this day make sure you’re following me on instagram we’re now 3000 followers on instagram we are
Really arising our ranks there i’m trying to bring some great value on instagram thank you for watching and have a great day
Transcribed from video
When To SELL Your Stock Exactly By Financial Education
